Answer: The Indian economy has done well in the financial year 2004-05. It grew at 6.9% following upon a growth rate of 8.5% in the financial year 2003-04. This high growth took place despite a deficient summer monsoon and rising prices of oil and steel. We also had to cope with the aftermath of the tsunami disaster.

What is most significant during 2004-05 is that growth has come across the board that is in agriculture, in industry and in services. This has also significantly boosted domestic demand. Our merchandise exports grew by over 25% following growth of over 20% in each of the preceding two years.

The prospects for the year 2005-06 are strong. The performance of the Indian economy during the last two years suggests a possible ratcheting up of the trend growth rate of the economy from 6 to 7% per year. This will require concerted efforts many of which have been announced by the Finance Minister in the Budget for the current Financial Year.

The rapid growth of the Indian economy in recent years is the outcome of a number of interrelated factors. Many of these stem from the process of liberalization and reform that was initiated in 1991 and has subsequently continued under successive governments. The economy is today more mature and the institutions of the market economy well developed. This enables a generally efficient use of resources. It is becoming easier for entrepreneurs to implement their plans and ideas. The cost of borrowing has been declining and inflation has been generally under control.

Our successes in the services sector are well catalogued. The rejuvenation and reorganization of Indian industry is not as well known but is now increasingly being understood and recognized. Improvements in agriculture have not been as rapid as we would have liked but the food processing, dairy and poultry sectors are growing rapidly. Domestic demand is the principal driver but the external sector is gaining in importance.

Question: India and China are both developing countries. In your opinion, what are the similarities that the two countries share in developing economy, and what are differences between us? Many people around the world are keen to see China and India rivals in the increasingly globalized world economy. What’s your opinion?

Answer: India and China are both ancient civilizations which have interacted to mutual benefit in the past. We are neighbours and the two largest developing countries in the world; also the two most populous countries in the world. Both are developing countries which have of late been enjoying very rapid rates of growth. Our socio-economic developmental experiences are most relevant for each other. This is especially so since the developmental base of our economies is quite similar.

We also have important dissimilarities. Our systems of political governance are different. India is a long standing market economy with well established market institutions. India is also more plural; it is multi-ethnic, multi-religious and multi-lingual. Further, we have sustained our cultural values and traditions to a very significant extent while engaged in the process of modernization and adaptation to globalization. Our developmental paradigm is also quite different from that of China.

India’s economy is largely internally driven through domestic demand and investment and the developed institutions of the market economy enable productive use of our savings and investment. Our dependence on foreign direct investment is considerably less than that of China’s.

India and China are the two potential power houses of Asia. It is, therefore, not surprising that there are those who would like to see us as rivals in the increasingly globalised world economy. There is no doubt that there are and will be areas of competition between us. A certain amount of healthy competition is always good for it keeps us on our toes. But, there is more than ample space in the world economy for both our fast growing economies to be accommodated. As cooperation between our two countries in trade and economy develops, our synergies are likely to grow. Our engagement of and cooperation with the economies of ASEAN and East Asia will also be to our mutual benefit.

Question: To your understanding, what will India orient itself in the future world structure? What a role would India play in the Asia and in the world at large?

Answer: India is an inclusive, open, multi-cultural, multi-ethnic and multi-lingual society. India has demonstrated that pluralism works. This is also the dominant trend in the political evolution of societies in the 21st century.

India’s independent external policies have consistently been shaped by our commitment to the core values that I have referred to above. These are drawn from our civilisational experiences. In practical term, our commitment is to peace and freedom, to our economic development and to the development of all developing economies within the framework of an open society and an open economy.

India will continue to engage the world in a constructive and forward oriented manner. Our relations with Asia are a critical and increasingly important constituent of our foreign policy.

The importance that we attach to our relations with Asia is reflected in our propagation of the idea of the Asian Economic Community to be built on the new dynamics in Asia and the synergies which are bringing us closer together. Prime Minister Manmohan Singh has spoken of this community of nations as constituting an “arc of advantage” which would act as an anchor of stability and prosperity in our region and beyond. We believe that this is an idea whose time has come and we must grasp this opportunity together with our partners in ASEAN, China, Korea and Japan.

India’s commitment to peace, stability and development will continue to underline the conduct of its foreign policy.

Question: How should India and China cooperate to boom both economies and help to keep the peace and stability of the region?

Answer: In the Declaration of June 2003, the Prime Minister of India and the Premier of China clearly enunciated that sustained economic and social development in our two countries, representing one-third of humanity, is vital for ensuring peace, stability and prosperity not only in Asia but also in the whole world. They also stressed that the continued expansion and intensification of India-China economic cooperation is essential for strengthening bilateral relations. Over the last two years as relations between our two countries have developed and diversified, our two economies have continued to grow rapidly and our bilateral interactions have also strengthened. Bilateral trade has grown very significantly and the challenge before us now is to sustain a sufficiently high growth rate in the years ahead. Economic cooperation activities have also progressed.

The Joint Study Group established by the two Prime Ministers to examine potential complementarities and draw up a programme for development of bilateral trade and economic cooperation is expected to conclude its work before Premier Wen Jiabao’s forthcoming visit to India. We look forward to the JSG making concrete recommendations that would enable us to further cement the trade and economic partnership between our two countries. There is need for much greater trade facilitation on both sides. Information gaps still remain but the process of discovering each other’s markets and opportunities is well underway and bodes well.

Constructive cooperation and the growth of trust and understanding between our two countries is a process that we are carefully nurturing and encouraging. As our economies continue to develop rapidly in the years ahead not only will there arise even more opportunities for bilateral cooperation but there will also be concrete opportunities for our other partners in Asia. This will help contribute to development, peace and stability in our region.

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